dissenting: The problem here is as to when a gift to charity is effective and therefore deductible under section 23 (o) of the Internal Revenue Code. Two checks are involved, neither of which was paid within the taxable year, and one of which was not paid until after the death of the maker. A reasonable regard for consistency seems to require that the conclusion here should not be different in principle from those many cases which have laid down the essential doctrine that the test of a taxable gift is abandonment of economic control over property, and that there is no gift if power remains in the donor to revoke or recapture the property. Burnet v. Guggenheim, 288 U. S. 280; Sanford's Estate v. Commissioner, 308 U. S. 39; Smith v. Shaughnessy, 318 U. S. 176. The principle is recognized in Robinette v. Helvering, 318 U. S. 184, is not essentially different than that laid down in Corliss v. Bowers, 281 U. S. 376, and has often been applied by us, e. g., Estate of Ethel K. Childers, 10 T. C. 566, 579; Estate of Ralph Owen Howard, 9 T. C. 1192, 1199; Estate of Louis J. Kolb, 5 T. C. 588, 594. The control regarded as so important throughout the above cases was in nowise lost by the maker of the check here, for under law so settled as to require no citation, he could, until payment, revoke the check, and the one check was revoked by his death. In the light of the above authority, could it be denied that a check paid only after the maker’s death did not effect a gift inter vivos so as to diminish his gross estate ? Yet the point here is not in essence different: Was the gift consummated, before death as to the one check, before the end of the year as to both?
The majority, in announcing (for the first time, in the body of the law so far as I have been able to find) the idea that a gift by check is effective at the date thereof, if the check is later paid, even after death, appears to find some deviation from the principles of the older cases above cited, in the fact that since 1938 section 23 (o) provides for deduction of gifts or donations “payment of which is made within the taxable year”; in short, shift the complete emphasis to “payment” to the disregard of the previously settled concept of completed gift. But there was no such intent in the change effectuated by the Revenue Act of 1938. The object was merely to put cash and accrual taxpayers on the same footing. Committee Report, House of Representatives, 1939, C. B., Pt. 2, pp. 741-742, quoted in the majority opinion, shows clearly what Congress had in mind. It is to be noted that the committee report twice says “actually paid” and that only in the year thereof is deduction to be allowed. In the face of that language the majority opinion says that the later honoring of a check, even after death, “related the payment back to the date of delivery.” The statute does not say so; and the Congress did not so intend. It required actual payment in the year of deduction.
To sustain its conclusion the majority leaves the field of the law of gift, and relies wholly on the general thought that a check is conditional payment, effective from date in case it is honored. Not a single case is cited involving a gift; all merely involve payments by check. In short, the incidence of the prime principles of the law of gift is ignored, and only in this majority opinion is there put forth the concept that later payment of a check, and its discharge of its obligation when made, affects the law of gift. In addition, to arrive at the conclusion, the majority overrule Estate of John F. Dodge, 13 B. T. A. 201, holding squarely that gifts drawn and (as to some) delivered in 1919, but paid in 1920, some of them after the drawer’s death, did not constitute gifts deductible in 1919. To overcome the effect of that case, which was cited in John D. Archbold, 42 B. T. A. 453, in holding that a promise to make a gift is not a present gift, the majority points out that the Dodge case was distinguished in Estate of M. A. Bradley, 19 B. T. A. 49. That is true, and in doing so we removed any ground for the reliance, which the majority here put, on the Bradley case on the question here presented, for we said:
In Estate of John F. Dodge, 13 B. T. A. 201, we held that the payment by the bank of a check representing a gift was necessary in order to complete the gift. That decision was based primarily on the lack of consideration for the gift. The status of a gift, however, is quite different from that of the payment of the legal obligation involved in this case. Hence, our decision in the Dodge case is not in conflict with the views above expressed.
The distinction was sound, for the Bradley case had nothing to do with gift, but was one where we emphasized repeatedly the acceptance at time of delivery of a check as payment of taxes, the custom of the county treasurer as to acceptance of checks, his knowledge that the check was intended as immediate payment because of the payor’s health, and the delay of the treasurer in presenting the check — all elements under hornbook principles to establish effect for the check when given, but having no relation at all to the problem of effective date of gift. Yet, the Bradley case, so carefully distinguishing the Dodge case as involving gift, not in the Bradley case, is now made the basis of overruling the Dodge case. This is truly remarkable.
When we turn to the subject of gift, we find ample law that a check does not work a gift. Burrows v. Burrows (Mass.), 134 N. E. 271. In City Bank Farmers Trust Co. v. Hoey, 23 Fed. Supp. 831; affd., 101 Fed. (2d) 9, the court, in holding that a court decree directing payment of a gift from an incompetent’s estate does not effect a gift, but may be revoked at any time prior to actual payment, says:
* * * Not even tlie handing over of a check to the donee, * * * constitutes a gift; until the check has been paid or accepted by the bank there is no valid gift.
The court held, therefore, that the gift was made when the money was paid over by the incompetent’s committee, after June 6,1932, and not prior to the effective date of the gift tax law, though the court decree antedated that statute.
On this subject, I note 38 C. J. S. on Gifts, p. 842, as follows:
As in the case of a note, the gift of the donor’s own chock is but the promise of a gift and does not amount to a completed gift until payment or acceptance by the drawee. * * * at any time prior thereto, the donor may revoke it by stopping payment, and it is ipso facto revoked by the death of the donor. The gift of a check becomes complete when, in the donor’s lifetime, it is paid, certified, or accepted by the drawee * * *. [Italics supplied.]
The majority, however, says that the idea that death revokes a check is erroneous. I find the body of the law to the contrary. Even absent the element that the check is for a gift, 9 C. J. S. on Banks and Banking, p. 695, says:
As a general rule the death of the drawer of a check before its certification, acceptance, or payment revokes the authority of the bank to pay it. Likewise, the authority to collect is revoked by the drawer’s death; consequently, even though the circumstances are such that a bank has incurred no liability by paying a check after the drawer’s death, the payee who has received the proceeds after the drawer’s death must refund the amount to the drawer’s estate. * * *
When we go to the law of gift, we find 38 C. J. S. 849 saying:
The purported gift of a cheek drawn by the donor is in general revoked ipso ifacto by the death of the donor before payment, or before payment or acceptance of the check by the drawee, or, as sometimes stated, before presentation for payment, except, according to some cases, where the check is for the exact amount which remained in the donor’s bank account.
On the same subject, 12 R. C. L. 945 reads:
The rule seems to be well established that the delivery of a check with the intention of making a gift of the amount thereof does not constitute a valid gift of such amount where the check has not been presented at the bank and paid or credited to the payee, and in the absence of such payment or acceptance the death of the drawer operates, as against the payee, as a revocation of the check. * * * After a check delivered with the intention of making a gift of the amount, has been presented and paid, the gift of the money is then complete.
In Sneider v. Bank of Italy, 194 Pac. 1021, a bank paid two checks after the death of the drawer, after notice of death. The adminis-tratrix of the drawer’s estate recovered. Citing Pullen v. Placer County Bank, 71 Pac. 83, the court said:
* * * Consequently the vitality of a check, at least where it has not been accepted or certified prior to the knowledge of the death of the depositor, ceases upon receipt of such knowledge by the bank, and a bank which pays such a check after knowledge of the death of the depositor is liable to the estate of the depositor.
See also In re Mellier's Estate, 182 Atl. 388.
Among many other cases found on the subject of checks as gifts, the following are suggested: Straut v. Hollinger, 50 Atl. (2d) 478 (checks not presented for payment until after drawer’s death, then protested by the executor, held not gifts: “Again the checks were not completed gifts. They were subject to the control and dominion of the maker during his life”); Provident Institution for Savings v. Sisters of the Poor, 100 Atl. 894 (gift not effected by check because the donor can stop payment; distinction made between check for value and donation); Smythe v. Sanders, 101 So. 435 (there is no delivery in case of gift of check “unless and until it is cashed in lifetime of donor,” as attempted gift is one of money); Bowman v. Sears, 218 Pac. 489 (a completed gift not “consummated” by check without presentation before death).
In Keller v. Davis, 187 Atl. 267, the check was an ordinary check, but on a savings account. It was credited to drawee’s account before death. The court said:
If It should appear on the settlement of the estate that the cheek was not given in payment of a debt or obligation due by Mrs. Keller [drawer] to Mrs. Davis but was a gift, the death of the drawer would render it uncollectible.
That these cases do not involve actual payment of checks after death seems to me immaterial. Can it be doubted that even if a bank did so pay a check, after death, the courts deciding the above cases would compel repayment, because of incompletion of gift before death? If so, I think we can not validate a gift, for purposes of deduction, where it is not consummated by payment either before death or before the end of the taxable year. Not only do I find no sound reason to overrule the Dodge case, but the whole theory and law of completed gifts sustains it, and cases having no relation to gifts may not rightly be basis for taking a new view. Statutes on the same subject should be read together. This one involves primarily gift, but “payment” is involved. The majority gives no consideration to the element of gift.
Further, I point out, contrary to the view of the majority that the cashing of the checks related back to date of delivery, notwithstanding death, as to the one check, that, despite payment after death of a check given as a gift, it is no gift. In Burrows v. Burrows, supra, by the Supreme Court of Massachusetts, the gift check was cashed after death and suit was filed by the administrator to recover. Though the donor’s pass book was also delivered by him to the donee, and though the state law gave the bank a period after death in which to cash such checks, the court held that because a check is revocable, no gift was effected. In Pullen v. Placer County Bank, supra, the gift check was paid after death. The court held that there was no gift. Though the donee had been requested not to cash the check until after death, the court specifically says that was of no effect. In Bridewell v. Clay, 185 S. W. (2d) 170, the gift check was cashed after death. Legatees and heirs sued to recover, and obtained judgment. In Chrzanowska v. Corn Exchange Bank, 159 N. Y. S. 385, the bank paid a check after drawer’s death and was sued. Judgment was for the defendant. “ * * * upon the death of the drawer before presentation the authority of the holder is revoked, and the bank is no longer authorized to pay; but on principles of necessity incident to the banking business, if the bank pays in good faith and without notice of the death of the drawer, it is protected.” Thus we see that it is not true that a check given as a gift, if later cashed after death, relates back to the date of check or delivery, and the statement from Glennau v. Rochester Trust & S. D. Co., 209 N. Y. 12, quoted in the majority opinion is shown not to apply to checks given as gifts. Even those cases, such as Chrzanowska v. Corn Exchange Bank, supra, where the bank paying after death is protected, recognize that there was revocation of the check by the death and the protection is on different principles. We are here interested not in whether a bank paying without notice of death would be protected, but whether a gift by check is to be considered paid when delivered, notwithstanding later death of the donor. The cases on the subject contradict completely the majority conclusion here. The bank’s payment of a gift check does not “relate back,” and even payment without notice protects only in some cases. If the doctrine of relation back applied, the defense of lack of notice of death would be superfluous. There is not, under the cases, the “payment” required by the statute, if death intervenes to revoke.
Nothing in the statute or its history indicates that there was intent to desert the usual requirement of completion of gift in order for it to be deducted in the taxable year. The intent only to equalize cash and accrual taxpayers is clear. These gifts were subject to complete revocation before the end of the taxable year. The $2,800 check, it will be noted, could not have been cashed within the year because it was not received until after banking hours on December 31. How, then, can it be said that the payee had the dominion required in case of a gift? Both checks were, of course, altogether revocable. The majority idea of relation back of the checks when paid is plainly a mere application of the constructive receipt thought, in an attempt to secure a deduction.
A deduction is a matter of grace; and the concept of constructive receipt is sparingly applied. Citation of cases is not necessary. Even if constructive receipt by the payee could be found, constructive payment does not follow. Jenkins v. Bitgood, 101 Fed. (2d) 17. In Nina Cornelia Prime, Executrix, 39 B. T. A. 487, we said:
* * * The constructive payment theory has seldom been approved in claims of a taxpayer on a cash basis for a deduction which presupposes an expenditure by the taxpayer. * * *
In Cox Motor Sales Co., 42 B. T. A. 192, and citing Black Motor Co., 41 B. T. A. 300, and Helvering v. City Bank Farmers Trust Co., 296 U. S. 85, we pointed out the asymmetry of the taxing statutes and said, in effect, that the constructive receipt should be thought to imply constructive payment:
* * * We are not at liberty on that account to construe the section before us in a way that would obviously pervert the intent of Congress that actual payments should be made by the corporation to justify the deduction of the dividend claimed. [Italics supplied.]
So here, where Congress in its report twice specifically required that a contribution to be deductible be “actually paid,” I submit that no idea of constructive payment, by “relation back” of a check later actually paid in a later year or after death, should be allowed to overthrow settled concepts of the law of gift and of deductions allowable to a taxpayer, as here, on a cash basis.
Again, in Vander Poel, Francis & Co., 8 T. C. 407, 410, where the petitioner sought to secure deduction on the basis of constructive payment because of ability of the payees to secure payment, we said “the doctrine of ‘constructive receipt’ has been applied often * * *. But not so the doctrine of ‘constructive payment’,” going on to say that the weight of authority is against the doctrine that constructive payment is a necessary corollary to constructive receipt.
The majority view that relation back would cause a gift check to be paid under the statute since 1938 would be equally potent to cause such gift to be “made” under the prior law, in the year of delivery of check — and no new statute would therefore, on such theory, have been necessary to place the accrual-basis taxpayer in the same position as one on the cash basis. On such relation-back theory, he could accrue the gift by check because made when check was delivered. Yet Congress, surely cognizant that many if not most charitable gifts are by check, not only thought a change of statute necessary to equalize the two classes of taxpayers, but expressly, in the committee report, required actual payment. The only logical conclusion, in my opinion, is that Congress definitely did not regard gift checks as constituting actual payment — because of the settled nature of gift as requiring completion of dominion, which a revocable check did not entail. A check is a promise to make a gift. That the promise is fulfilled by later honoring of the check does not make the mere delivery of check, in a certain year, more than such promise. The majority’s suggestion that contributions may be based on consideration is, on the record here, wholly irrelevant, for there is nothing to indicate consideration for the $2,800 check, and as to the $5,000 check the majority only finds that payment was made by reason of a pledge made at a fund-raising dinner — plainly insufficient to show consideration. It can not be gainsaid that here we deal with gifts. I think the proper conclusion depends upon the nature thereof, .that Congress in 1938 affirmatively demonstrated that no change in that regard was intended in allowing deductions, and that the sound doctrine announced in the Dodge case should not be overruled and abandoned. I, therefore, respectfully dissent.
TURNER, Van Fossan, Black, Tyson, and Hill, JJ., agree with this dissent.